One-Size-Fits-All Rules For Getting Out Of Debt
Not all of us make six figures which means paying off debt can be tough. But it’s not impossible. Here is a one-size-fits-all guide to getting out of debt… even if you’re on a budget.
1. Face the music
Debt sucks, but it happens to everyone! Don’t be too proud to admit you’re struggling. Face the music and pay every penny that is due. Yes, it is scary but there comes a time when we all have to put on our adulting pants and take the consequences. But look on the bright side, going through financial hardship can give you motivation and new skills that can reverse your situation.
2. Tackle debt one balance at a time
Even the words “bills” and “debt” give me anxiety. To overcome the anxiety, take on your debt one step at a time. Though it may seem overwhelming, once you figure out how to pay off debt (point #3) you will be able to stick to a game plan.
3. Choose HOW to tackle debt
Paying off debt using the ladder method: With this method you start by paying off the largest amount due and work your way down the ladder to the lowest amount. When you tackle debts with high interests rates first, you can save, save, save!
Paying off debt using the snowball method: With the debt snowball method, you pay off your debts from smallest balance to largest balance, regardless of interest rates. This method works best for people who have a lot of little debts lying around.
4. Pay more than the minimum balance
This is a harsh reality but… making minimum payments will result in life-long debt. Even though your monthly statement says you only need to pay the minimum, you have to understand that the pace at which you pay debts can result in thousands of dollars in interest payments. Moral of the story, make higher-than-minimum payments.
5. Go autopilot with bills
Setting up your bills to be paid online can save you a lot of stress and believe it or not… money! Paying your student loans, rent, and utilities online will ensure that you don’t fall behind on big ticket expenses and some providers even cut you a discount for setting up auto-payments.
6. Know which solutions to avoid
Being in debt is panic-inducing. It can make you question your future and may even cause you to settle on goals. But ultimately, it can cause you to make poor choices. There are several debt reducing solutions available like having debt consolidating can seem intriguing. However, when a creditor reduces your debt into one single debt, it can totally ruin your credit score. Be careful out there!
7. Trim some fat out of your expenses
Being in debt is a harsh reality but it doesn’t have to absolutely control your life. There are simple everyday ways to save up to pay off large sums. You can buy food in bulk, cook at home more, bring your daily coffee from home, and use apps like Cartwheel and GoodRX to save money when you have to buy the essentials. It’s all doable if you just find what works for you!
Being in debt is always overwhelming, and especially when you’re trying to get out of it on a small income. But there is hope, and YOU are in control of your financial future. Make sure to share your debt-free tips with us in the comments below and on Instagram!
Sophia Zigmond / Writer